CFTC and OFR Sign MOU to Improve Data Quality

CFTC Acting Chairman Mark Wetjen, and Office of Financial Research (“OFR”) Director Richard Berner, announced a Memorandum of Understanding (“MOU”) outlining the terms and conditions under which the CFTC and OFR will begin a joint project to enhance the quality, types and formats of data collected from registered swap data repositories. 

The MOU establishes a process for assessing the quality of the data, and that assessment will form the basis for the subsequent development of a project plan for understanding swaps and other OTC derivative transactions and their impact on financial stability.  Further, the project plan will define the scope, content and intended outcomes of further collaborations between the OFR and the CFTC. 

Wetjen and Berner also announced the creation of a staff-level Interagency Data Quality and Analytics Working Group to, among other things, coordinate the structuring of this cooperative project, focusing on data quality and the use of analytical tools for regulatory purposes.

Lofchie Comment:  It is certainly a good thing when different agencies in the government work together to (i) determine what data actually would be useful and (ii) plan how best to collect, retain and analyze that data before issuing recordkeeping and reporting rules. Since the adoption of Dodd-Frank, millions of dollars have been wasted in an attempt to provide information to regulators that is, for one reason or another, worthless. In the case of the CFTC, the best example of this is historical data on pre-Dodd-Frank swaps (of what possible use could this be?). In the case of OFR, an example might be the leverage information on Form PF regarding hedge funds (where the questions are so poorly written that the answers are inherently useless).

See:  CFTC and OFR MOU
Related news:  CFTC Announces Formation of Interdivisional Working Group to Review Regulatory Reporting (January 22, 2014).